Stocks extended Friday's rally on Monday amid rising hopes for a US-China trade deal. The Dow Jones industrial average rose 0.7 percent, the S&P 500 gained 1.2 percent and Nasdaq rallied 1.9 percent as all three indexes set record closing highs. US Treasury yields and the dollar declined while oil prices rose.

More comments from President Trump and reports from the two sides that weekend trade talks were going well added to expectations that Trump and China's President Xi Jinping would reach an accord at their meeting on Thursday. At the same time, markets appeared bullish on hopes for rate cuts after Friday's cooler than expected US consumer price report.

Technology shares outperformed with Qualcomm leading after an announcement the chipmaker would get into the business of making semiconductors for data centers to compete with Nvidia and other leaders in the space. Shares of Magnificent Seven stocks advanced Monday to lead the market higher ahead of earnings from several of the firms this week.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.